Nifty may hit 5800 on decisive break above 5200: Guppy

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Nifty may hit 5800 on decisive break above 5200: Guppy

Daryl Guppy, Founder and Director of Guppytraders.com expects some pullback in Dow and S&P 500. “The Dow is expected to trade in the range of 10,000-10,700. Also, I expect the dollar index to come down to 76-77.”

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Q: What about our markets? What about the Nifty and the Sensex?

A: The key factor for the Nifty and the Sensex is that we are sitting at upper level of these resistance levels. Nifty we are sitting on the resistance level around 5,200 and Sensex around 17,500. The interest rate announcement is probably going to pull us back from those areas initially but this is part of general pattern of this rally and retreat behaviour within this consolidation.

Downside support levels for the Nifty are sitting back at around 4,600 and the Sensex around 15,500. So look for rally and retreats rather than long-term trends at the moment.

Q: Any fear that the Dollar Index might actually go beyond 81-82 kind of level in the Nifty near-term because it has rallied over the last couple of days?

A: If you look at the rally over the last couple of days it actually started to top out and hit that resistance level. It's moving back and forth below resistance. The implications of the healthcare bill in the US are a massive amount of ongoing debt. So we would like to see some weakness developing in the dollar and perhaps coming back towards 76-77 level initially.

Q: There has been some traction in some of our key heavyweights like Infosys and Reliance. Do you track those charts?

A: We have got strong uptrend continuation on Infosys. So you use Guppy Multiple Moving Average analysis on this we can see that there is strong underlying investor support and if we a use trend volatility line, it gives us a very good way to manage this rising trend.

If you look at some other stock, for instance, from the banks-ICICI Bank is the best of the banks with an upside target of around Rs 1,050. Wipro is also very good-long, solid uptrend line but its moving towards resistance levels. The uptrend line is acting as resistance. So it must move above Rs 760 historical resistance. But there are lots of stocks with weakness which you need to avoid.

Q: What level on the Nifty would constitute a breakdown in the uptrend for you?

A: We need to see a solid move above 5,200. That means a move above 5,200 and retreat back to around 5,200-using that support level and then a rebound. That gives Nifty's upside target around 5,800. We need to see the same behaviour in the Sensex. In other words breakout above 17,500, a pullback and retest the support and then we can have an upside target sitting around 19,500.

But at the moment we are going to be stuck on the sideways trading band. The interest rate announcement is negative in the short-term.